|Project Rationale and Linkage to Country/Regional Strategy
Since 1996 when ADB began lending to Uzbekistan, 44 public sector loans totaling $3.3 billion have been approved. The current country portfolio contains 20 projects with 24 active loans for $2.21 billion that provide support to seven sectors. The transport sector accounts for the largest share of ADB assistance (40%), followed by energy (23%), water supply and sanitation (13%), agriculture and natural resources (11%), multisector (9%), finance (3%) and education (1%). ADB has recently expanded its operation and provided four public loans ($655 million) in 2010 and six public loans ($878 million) in 2011. Meanwhile, the World Bank approved three loans totaling $291 million in 2011 which is the largest amount provided in a year. Japan International Cooperation Agency resumed its loan operation in 2010 and has provided $250 million on average each fiscal year since then.
To ensure timely delivery of results under the up-scaled operations, greater efforts are required to improve project monitoring, and portfolio management. Though the government has a high-level portfolio monitoring structure in place, only half of ADB funded projects show on-track performance in 2012, which requires further efforts to strengthen the project monitoring and portfolio management capacity. The Department of Monitoring of Implementation on Foreign Investments and Projects (DMIFIPs) of the MFERIT is responsible for monitoring, reviewing, and analyzing portfolio performance on a quarterly basis to identify key implementation issues . However, the current monitoring system requires manual collection of information from executing agencies (EAs) in spreadsheets. The DMIFIPs does not have ready data base, though monitoring of implementation of the foreign-assisted projects is of a great importance to ensure appropriate and efficient use of foreign funds to implement strategic objectives of the government development policy. Timely acquisition of data on project implementation progress, and promptly addressing issues are crucial to achieving better portfolio management.
To assist the government in improving its portfolio performance monitoring system, it is important to strengthen DMIFIPs' capacity to coordinate with EAs and develop a unified monitoring system. This system will enable DMIFIPs as well as EAs to: (i) establish a database of foreign-assisted projects to monitor and improve performance, and (ii) identify and single out causes of delays in project implementation in a timely manner and enable them to resolve the issues and bring the project back on schedule, and (iii) put priority efforts in improving overall portfolio performance of foreign-assisted projects in a sustainable manner.
Given the country's growing debt portfolio and a shift to less concessional funding, there is also a need to strengthen Uzbekistan's public debt management. The government has introduced a number of measures to strengthen the capacity of the MOF by building a strategic and operational framework for debt management. The role of the Public External Debt Division (PEDD) of MOF in accounting, auditing, and fund flow management has been expanding, and its accountability as a service provider to line ministries is becoming more clearly defined. Effective management of data on domestic and external public debt is crucial. This will necessitate the compilation and processing of all debt-related data to enable reliable and complete internal and external reporting on debt and related issues. However, the information is currently manually recorded and maintained, which is not suitable for real-time debt management and analysis.
Therefore, there is a need to have appropriate information technology system to support effective debt management. Strengthening the capacity of the PEDD and adopting an internationally recognized and used debt management system such as DMFAS , will enable MOF to develop a debt database containing detailed and aggregated data on loan contracts, bonds and grants, real operations (disbursements and debt service) as well as future operations. As the system can process large quantities of data, more time and energy can be deployed on analytical and management tasks.